The U.S. labor market ended 2025 on a soft note, with job creation in December less than expected, according to a report Friday from the Bureau of Labor Statistics.
Nonfarm payrolls rose a seasonally adjusted 50,000 for the month, lower than the downwardly revised 56,000 in November and short of the Dow Jones estimate for 73,000.
At the same time, the unemployment rate fell to 4.4%, compared to the forecast for 4.5%.
A more encompassing measure that includes discouraged workers and those holding part-time jobs for economic reasons dropped to 8.4%, down 0.3 percentage point from November. The household survey, which is used to calculate the unemployment figures, showed an increase of 232,000 while the labor force participation rate edged lower to 62.4%.
The report presented a muddy view of the labor market, with companies reporting a low level of hiring but households showing employment gains.
Stock market futures gained following the release while Treasury yields were stable.
In addition, revisions brought totals down for the prior months. The November total saw a slight downward revision of 8,000 to the payrolls number, while October’s loss was even more than originally reported, now at 173,000 compared to the prior estimate of 105,000.
For the full year, payroll gains averaged 49,000 a month, compared to 168,000 in 2024, according to the BLS.
“The jobs report is a mixed bag, with both positive and negative aspects,” said Art Hogan, chief market strategist at B. Riley Wealth. “We continue to see an environment where companies are slow to hire and slow to fire. The overarching takeaway in today’s report is that there is more good news than bad in the first on-time jobs report in three months.”
Prior reports had been delayed due to the government shutdown, which saw data collection and reports suspended during the 43-day impasse.
Restaurant and bar jobs led the month, rising 27,000, while health care added 21,000 and social assistance increased by 17,000. Retail reported a decline of 25,000. Government added just 2,000 jobs for the month.
Average hourly earnings rose 0.3% for the month, in line with the forecast, although the annual increase of 3.8% was 0.2 percentage point higher than expected.
Federal Reserve officials have been watching the jobs picture closely for guidance on the future path of interest rates.
The annual payrolls gain of 584,000 for 2025 is the worst year outside of a recession since 2003, according to Heather Long, chief economist at Navy Federal Credit Union.
“It’s fair to say that 2025 was a hiring recession in the United States,” Long wrote. “The United States is experiencing a jobless boom where growth is strong, but hiring is not. It’s a great scenario for Wall Street, but an uneasy feeling on Main Street.”
Despite some clamoring for additional rate cuts on top of the three the Fed approved in the latter part of last year, the economy looked in fairly solid shape as a tumultuous year came to a close.
The Atlanta Fed’s rolling measure of incoming economic data is pointing to gross domestic product increasing at a 5.4% annualized pace in the fourth quarter. That comes off a third quarter in which the broad growth measure rose at a 4.3% rate.
In addition, consumers, who power two-thirds of the $31 trillion U.S. economy, spent heavily during the holiday season. Adobe estimates that online spending rose 6.8% from a year ago to record-setting $257.8 billion.
Markets expect the Fed to stay on hold for a period following the succession of cuts that began in September. The next cut is not priced in until June, though that could change following the payrolls report.
